What is the purpose of title insurance?

The purpose of title insurance is to protect against financial losses due to title issues. Title insurance provides coverage for property owners and lenders against potential claims or defects in the title that might arise after a property purchase. These issues can include errors in public records, undisclosed liens, fraud, or disputes over ownership. By obtaining title insurance, the insured is afforded financial protection that covers legal fees and potential losses incurred due to these title-related problems.

This protective measure is especially crucial when considering that title issues can emerge long after a transaction has been completed, possibly leading to significant financial detriment. For instance, if a previous owner had unpaid debts that are secured by a lien on the property, the new owner could be held responsible for those debts without title insurance. Therefore, title insurance serves as a safeguard, ensuring that the new property owner is not left vulnerable to unforeseen title complications.